Multinational Corporations - World war ii

As one might expect, U.S. entry into World War II in 1941 disrupted the
normal channels of American commerce, discouraging or making impossible
direct investments overseas. Between 1940 and 1946 such investments grew
only marginally, from $7.0 billion in 1940 to $7.2 billion in 1946. In
that year they amounted to only 3.4 percent of the GNP, the lowest
percentage in the century. What American investments made abroad during
the war were largely in the Western Hemisphere. Although investments in
Canada and Latin America grew from $4.9 billion in 1940 to $5.6 billion in
1946, investments in Europe declined from $1.4 billion in 1940 to $1
billion in 1946. In Africa and the Middle East they remained steady at
about $200 million for each of these years, while in the rest of the world
they declined from $500 million in 1940 to $400 million in 1946.

Most of these investments went to further the war effort. No commodity was
more important in this regard than oil, on which the entire machinery of
war depended. So urgent was the need for oil, in fact, that the War
Department invested $134 million in the construction of a refinery and
pipeline in Canada as part of a project (the Canol Project) to open a new
oil field in the Canadian Northwest Territories. The project had little
commercial utility, and after the war it was abandoned when none of the
parties to the project showed any interest in continuing it.

In the Middle East, Secretary of the Interior Harold Ickes, who also
served as petroleum administrator for the war and generally distrusted the
oil industry, even tried to obtain government ownership of American oil
concessions in Saudi Arabia and Bahrain. Opposition from oil interests and
doubts even within the administration about a government takeover of
private enterprise ultimately doomed Ickes's plans. An effort, on
the other hand, by several American oil companies to gain an ownership
stake in the Anglo-Iranian Oil Company led to strong and ultimately
successful opposition by the British, who objected to what they regarded
as an attempt by Washington to lock them out of oil development in the
Mideast, and by the Iranians, who wanted to delay until after the war any
decision on its most vital resource.

During the war a number of major multinational corporations engaged in the
production of strategic materials, such as oil and synthetic rubber, were
accused in congressional hearings and on the floor of Congress of having
conspired with the enemy before the war. In particular, the oil and
petrochemical industries were charged with exchanging trade secrets in
chemicals with the chemical giant I. G. Farben and other German firms
deemed instruments of Nazi policy in return for trade secrets in oil
refining. Civil and criminal actions were even brought against a number of
these companies, the most notable being against Exxon, which in 1929 had
signed an agreement with Farben recognizing its "preferred
position" in chemicals in return for Farben's recognition of
Exxon's "preferred position" in oil and natural gas.
The two giant corporations also pledged close cooperation in their
respective enterprises.

In 1942 the Justice Department brought a civil antitrust suit against
Exxon, charging it with delaying the development of high-quality synthetic
rubber because of its agreement with Farben, which prevented easy access
to important data by other U.S. rubber companies. Although Exxon blamed
the German government and not Farben for withholding the needed data, it
entered a plea of "no contest." As part of its plea bargain
it also agreed to release all its rubber patents free during the war, with
the royalty on these patents to be determined after the war ended.